From the desk of Willie Delwiche.

The broker-dealer index (XBD) has eclipsed its August high and almost back to even on the year. Relative to the S&P 500, XBD has broken out above its early 2021 peak and is now at its highest since 2008.     

Why It Matters: Seeing uptrends in areas outside of just the Energy sector suggests rally participation may be expanding. This gives investors who can move beyond just the indexes more opportunities to lean into strength. But the broker/dealer group isn’t just any group. It’s typically seen as a leading indicator for the S&P 500 overall. Relative strength from this group is good for the market overall and says encouraging things about overall risk appetite.      

We take a Deeper Look at investor risk appetite and whether the recent improvement is likely to be sustained.

From the Desk of Kimmy Sokoloff

The market was holding steady until a news report took the $SPX down to roughly 3,950.

That news report was later negated, and now we're back to where we started the day near the 4,000 level. 

We've adjusted a position in the Paid-to-Play portfolio today:

We pride ourselves on never being dogmatic and always being open to any scenario.

What often marks a great technical analyst is the ability to choose to be objective and not letting emotion get in the way of analyzing money flow.

And we all have that choice.

We can be driven by an immediate emotional response and gather into an angry mob over the injustices of the FTX situation.

Or we can take responsibility for our own self-interest and continue to look for opportunities as they come.

It's hard not to feel like an asshole as I write this. But your only objective here is to make money. If you're a trader, you're not here for some greater good.

Now, to be clear, I in no way celebrate these misfortunes. Financial markets are brutal, and there’s nothing worse than the guy getting off on people blowing up.

But it’d be a terrible shame to walk away from this institutional crypto contagion without taking some lessons.

We’re all human beings.

None of us is infallible.

Markets like these remind us of the importance of risk management, which is so easily forgotten in the good times.

There’s such...

Is there anything more important than the US Dollar?

They keep fighting me on it, but the market keeps proving them wrong.

It's the Dollar stupid!

There were a handful of extra-large Form 4 purchases reported by insiders and executives yesterday.

At the top of the list is another Form 4 from Matthew Jacobson, who disclosed an additional $20 million purchase in the software stock, Datadog $DDOG.

From the Desk of Kimmy Sokoloff

The market dipped in the last hour or so yesterday, though $SPY managed to close above 395.

We've seen a big bounce this morning, and we're back at the top of the range at 399.

This week we're looking at cement stock. After an underperformance, the strength is coming back to this industry group.

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

This is one of our favorite bottom-up scans: Follow the Flow.

In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.

We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.

Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.

We also weed out hedging activity and ensure there are no offsetting trades that either neutralize or cap the risk on these unusual options trades.

What remains is a list of stocks that large financial institutions are putting big money behind.

And they’re doing so for one reason only: because they think...

Last week’s 5.9% rally in the S&P 500 was the best single-week gain since June but it was not enough to shift any of the criteria on our Bull Market Re-Birth Checklist.

More Context: Big weekly moves in either direction have been relatively common this year. The S&P 500 has gained or lost 3% (or more) nineteen times so far this year. The average year since 1945 has seen 6 weekly moves of 3% or more. The record (held by 1974 and 2008) is 21. As I mentioned in last week’s Townhall Takeaways, volatility and strength have tended to be inversely correlated. Our Bull Market Re-Birth Checklist helps cut through the noise of big price swings and looks for evidence that strength could be sustainable. It's close but no cigar for several of the checklist criteria, suggesting the jury is still out on the current move. And after getting to 4 out 5 criteria met during the rally into the August peak, we are looking for 5 out 5 for evidence of a...

From the Desk of Kimmy Sokoloff

The indices consolidated most of the day.

And that's healthy.